PNB Scam - Law Insider Insight

Initial Unfolding of the Scam

PNB alleged that the associates of the accused firm on 16 January, 2018, presented a set import documents asking for buyers’ credit. Nirav Modi being an importer of diamonds, importers prefer to take loans in foreign currencies as they have lower interest rates.

PNB ignoring red flags

The LoUs are delivered through SWIFT, that are coded messages used in international banking. It was found that two junior employees of PNB had issued LoUs on the SWIFT interbank messaging system without entering the transactions on the bank’s own system.

Is PNB completely oblivious?

SWIFT accounts go through a three-step verification- create, check and authorise the transactions. Thus, bank employees at different levels were probably complicit or either completely negligent.

Aftermath of the scam

Nirav Modi who absconded early 2018, was found in London, where he was seeking asylum and in March 2019 was arrested and is currently facing extradition to India, where he is going to face charges of fraud and money laundering.

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